1. Operations & Supply Chain

Reimagining the Fate of Returns With Reverse Logistics Experts

Modern consumers clearly value lenient, streamlined and cheap — if not free — return policies. At the same time, the cost of processing these returns has never been higher. To further complicate matters, a given retailer’s biggest returners are often some of their best customers. A majority of shoppers surveyed said they make the most returns at the retailers where they shop and spend the most. Just as an efficient and transparent return policy will promote loyal patronage and strengthen a brand’s reputation, a poor policy will frustrate customers, hurt profits, and leave a brand or retailer with an ever-growing pile of returns.

How Can Retailers Better Handle Returns Without Risking Customer Loyalty?

While retailers seek to lower costs by implementing new return policies — including shortened returns windows and restocking fees — this can deter customers from making a purchase altogether. And considering that 92 percent of consumers who have a positive return experience will revisit that brand for another purchase, it’s best to still offer some level of flexibility.

There have been some positive changes on the consumer front. Some retailers have established convenient drop-off locations to save shoppers the hassle of printing shipping labels and repackaging their unwanted items. Other retailers have implemented “keep it” refund policies that allow customers to simply keep their refunded item. While this approach tends to make customers happy, it’s also a strategic decision made by retailers that have determined the value of the item itself is lower than the total cost of shipping, inspecting, and re-shelving it. Even then, however, retailers need to remain wary of customers who might try to abuse such policies.

We’ve also seen enhancements to the front end of the online shopping experience as more businesses adopt artificial intelligence-based chat functions and augmented reality tools that allow shoppers to visualize how something will look on their body or in their space. While these innovations empower customers to make more informed purchase decisions, they still aren’t guarantees to stop a return in its tracks.

How Can Retailers Reimagine Their Returns Process to Encourage More Sustainable Practices?

By leveraging smart technologies, data analytics and customer-centric initiatives, businesses can create a seamless and eco-friendly returns experience that reduces waste and minimizes the environmental impact. Here are three ways to tackle this growing challenge:

1. Use data to address the most common reasons for returns.

Businesses can analyze data to identify and track recurring issues with returned items, and then use these insights to address problems at the product level. While implementing technology like this can be costly, it decreases the likelihood of that same product being returned over and over for a simple, fixable reason.

2. Employ automated returns processing systems.

Return processing systems allow for precise sorting and inspection of returned items, streamlining decision making around whether a product is suitable for resale or in need of repairs. An automated system will also guarantee that customers get their refunded money back faster.

3. Optimize the liquidation of returns.

Speed of unloading excess inventory and recovery rate on returned goods are pinnacle metrics when measuring the effectiveness of a return process. A liquidation strategy that leverages “recommerce” can drastically cut down the time required to manually process and audit what gets remarketed, donated, recycled, destroyed or liquidated. A solution that connects brands and retailers with relevant buyers can help reduce storage and transportation costs, while returning more value than traditional liquidation methods.

The Future of Returns Lies in ‘Recommerce’

Alone, each of these measures is only one piece of a larger puzzle — and a band-aid on a bigger problem at best. Retailers will still face seasonal waves of returns and other unsold inventory that will sit in warehouses for long periods. These unsold items represent inaccessible cash value that will degrade as goods fade into obsolescence. Traditionally, retailers have turned to landfills, hoping to at least clear some valuable warehouse space. But amidst growing environmental concerns and a shifting social landscape — one where eco-friendly practices are increasingly expected — this option is less viable than it once was.

Retailers and manufacturers can find relief in the secondary market. The saying “One man’s trash is another man’s treasure” is exactly why recommerce exists. In this case, lightly used returns and surplus inventory are still valuable to many business buyers around the world. Selling to such buyers gives retailers a more sustainable alternative to landfills and incinerators, not to mention more warehouse space and a chunk of the items’ value in usable cash.

Take Things a Step Further With Reverse Logistics Partners

While retailers focus on developing and marketing new products that will fly off the shelves, they tend to lack the time and resources to effectively handle those that don’t. They can’t build their own buyer bases or analyze every level of their inventory management process. This is where reverse logistics partners come in.

A dedicated partner that specializes in recommerce will be indispensable for organizations looking to build long-term, data-backed inventory reduction strategies that prioritize efficiency, speed and recovery.

An expert partner can empower a retailer to more quickly locate qualified secondary market buyers, and help move out goods at high volumes so that inventory never piles up. Furthermore, the data and predictive analytics capabilities that these partners bring allow businesses to be more proactive in their planning and better understand their costs and how to improve their bottom line. With access to data across retailers’ specific industries, seasonal trends can be more accurately assessed and accounted for. Additionally, a top-tier reverse logistics partner will handle the administrative obstacles to velocity — e.g., listing goods for sale, billing, shipping coordination, and dispute management — all while generating demand and enlisting other 3PL solutions.

By implementing a more sustainable reverse logistics strategy alongside customized, managed solutions, brands and retailers can conquer their excess stock and make sure they never have to choose between their customers’ loyalty and their bottom line.

Marcus Shen is the CEO of B-Stock Solutions, the single platform to strategically sell excess and returned inventory.

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